LONDON/PARIS, March 6 (Reuters) - World shares rose on
Thursday, supported by diplomatic efforts to cool the crisis in
Ukraine, while the euro held steady on speculation the ECB could
take fresh action to support the euro zone economy.

The European Central Bank is expected to keep interest rates
on hold but loosen lending conditions to ward off the threat of
excessively low inflation and underpin a fragile recovery. Its
decision is due at 1245 GMT.

The Bank of England, also meeting on Thursday, kept interest
rates unchanged, seeking to give the economy more time to build
momentum before removing its stimulus.

European shares climbed, led by peripheral euro zone markets
such as Portugal, Spain and Italy, with the region's blue-chip
Euro STOXX 50 index gaining 0.6 percent.

The index, up 3.3 percent in three days, has now reversed
all the losses suffered on Monday when escalating East-West
tensions over Ukraine sparked a sharp sell-off.

"European stocks have been quite resilient in the face of
the multiple shocks, from the Fed's tapering to the Ukrainian
crisis, even though risks seem limited," Banque Leonardo
strategist Francois Chevallier said.

The euro held steady against the dollar, having
earlier slipped to its lowest this month.

Emerging stocks and currencies were broadly higher as
diplomatic talks to moderate the crisis in Ukraine were set to
continue, having made little apparent progress on Wednesday.

European Union leaders meeting in Brussels on Thursday were
set to warn but not sanction Russia, whose forces have seized
control of Ukraine's Crimea region, diplomats said.

But on the ground, the situation remained tense, with
Crimea's parliament voting to join Russia, and its Moscow-backed
government setting a referendum within 10 days on the decision.

"The worst case scenario on Ukraine has been avoided but
clearly discussion will continue for some time and there is
scope for instability in Ukraine for the time being," said Nick
Stamenkovic, a bond strategist at RIA Capital Markets in
Edinburgh.

Overall, MSCI's world equity index, which
tracks shares in 45 countries, was up 0.3 percent, and the MSCI
emerging market index was up 0.8 percent.

With investors' immediate fears of military confrontation
reduced, attention shifted to what action the ECB might take.

On Wednesday, International Monetary Fund officials called
on the ECB to start buying public and private assets or extend
more cheap long-term loans to banks, as well as cutting interest
rates to a new record low.

Yet the ECB may hesitate to buy government bonds, unlike
other major central banks such as the U.S. Federal Reserve and
the Bank of Japan, in part for fear such a step could violate
its ban on financing governments directly.

Other options include cutting rates or, more likely,
stopping "sterilisation" operations that soak up the money it
spent buying the bonds of Greece and other countries at the
height of the euro zone sovereign debt crisis.

DOVISH STANCE EXPECTED

"If there is no rate cut today, we expect serious dovish
talking from (ECB President Mario) Draghi in addition to any
'softer' action," Commerzbank strategists said in a note.

The euro traded at $1.3745, almost flat on the day,
having fallen as low $1.3707 earlier and off a two-month high of
$1.38255 hit on Friday.

With tension over Ukraine reduced, the dollar strengthened
versus the safe-haven yen. It was last up about half a percent
at 102.72 yen.

A report from payrolls processor ADP showed private
employment rose by a tepid 139,000 jobs last month, with jobs
growth in January revised down sharply to 127,000 from 175,000.

The more important U.S. non-farm payrolls report for
February is scheduled for release on Friday.

Gold traded in a right range with investors awaiting cues
from the U.S. jobs data and developments in Ukraine. It last
stood at $1,333.61 an ounce. Brent crude futures
dipped, down 14 cents at $107.62 a barrel.